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2017 (9) TMI 50 - HC - Income TaxReassessment u/s 147/148 - computation of capital gain - valuation report received from the DVO relied upon - fair market value of the property determination - Held that - Even in the original assessment order, the AO noted that the re-opening of the assessment order would depend on the valuation report received from the DVO. The reference to the DVO was made by him even during the course of original assessment proceedings. The order passed by the DVO under Section 55A of the Act further reveals that the Assessee had a full opportunity of pointing out to the DVO why the value proposed by him should not be finalized. For the reasons best known to her, the Assessee chose not to participate in the proceedings before the DVO. Consequently, it is too late in the day for the Assessee to question the determination by the DVO of the fair market value of the property in question. In the circumstances of the present case where the Assessee was fully conscious of a reference having been made to the DVO and chose not to participate in the resultant proceedings, the reopening of the assessment on that basis cannot be said to be erroneous. The AO was conscious that the valuation report would necessitate the re-opening of the assessment if it was found that what was declared by the Assessee as the value of the property was different than what emerged in the report of the DVO. The Assessee too was aware of this consequence. As is evident the value of the property in question as disclosed by the Assessee was far too less when compared to the fair market value as of that date as has been determined by the DVO. On merits, therefore, the re-opening of the assessment was entirely justified. Consequently, the Court sees no error having been committed either by the CIT (A) or the ITAT in confirming the addition. - Decided against assessee.
Issues:
Challenge to the ITAT order affirming CIT (A)'s additions based on DVO's valuation report under Section 147/148 of the Income Tax Act, 1961 for AY 2008-09. Analysis: 1. The appeal was filed against the ITAT order affirming CIT (A)'s additions based on the District Valuation Officer's (DVO) valuation report under Section 147/148 of the Income Tax Act, 1961 for the Assessment Year (AY) 2008-09. The challenge was primarily on the grounds that the ITAT erred in upholding the additions made to the Assessee's return of income based on the valuation report submitted by the DVO after a reference made under Section 55A of the Act. 2. The Assessee sold a residential property during the relevant AY, declaring an income of &8377; 1,38,007/-. The Assessing Officer (AO) referred the property's valuation to the DVO, who estimated the fair market value at &8377; 3,66,77,300/-. The AO then reopened the assessment under Section 148 of the Act, citing the valuation report as the reason for believing that capital gains had escaped assessment. 3. The Assessee objected to the reopening of the assessment, citing legal precedents, but did not challenge the valuation report itself. The objections were dismissed, and a reassessment order was passed, adding &8377; 48,21,216/-. The CIT (A) and ITAT upheld the addition, noting that the grounds for challenging the reassessment were not raised during the proceedings. 4. The Court observed that the Assessee had the opportunity to contest the DVO's valuation but chose not to participate in the proceedings. The AO was justified in reopening the assessment based on the significant difference between the declared value and the DVO's valuation. The Court found no error in the CIT (A) or ITAT's decisions, concluding that the reassessment was valid based on the DVO's report. 5. Ultimately, the Court dismissed the appeal, stating that no substantial question of law arose from the ITAT's order. The reassessment based on the DVO's valuation report was deemed justified, and the additions made were upheld. This detailed analysis covers the issues raised in the appeal regarding the ITAT's decision on the additions made to the Assessee's income based on the DVO's valuation report for the relevant assessment year.
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